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Jobs Report Taxes Obama's Political Capital

by Scott Horsley | NPR

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U.S. President Barack Obama (C) speaks with employee Elaine Hart (R) as he tours Gelberg Signs with company Principal Luc Brami during a visit to highlight the administration's initiatives to create jobs August 6, 2010 in Washington, DC. Pool/Getty Images

Jobs have become one of the most important barometers in assessing the president's performance, and the latest report shows that, in some ways, the economy has slipped backward. The anemic economic recovery is taking a political toll on the president, amplifying his other challenges.

Fairly or unfairly, jobs have become one of the most important barometers in assessing the president's performance. And if President Obama hoped to end his birthday week with a positive jobs report, he was disappointed.

The first Friday of every month, when the new employment numbers come out, is a moment of truth for the White House. The president tries to strike the appropriate balance between confidence in the direction of the economy and compassion for the millions of Americans still out of work.

"The road to recovery doesn't follow a straight line. Some sectors bounce back faster than others. So what we need to do is keep pushing forward. We can't go backwards," Obama said on Friday at a small sign-making company in Washington.

In some ways, though, the economy has slipped backward. Friday's jobs report showed that the U.S. lost 131,000 jobs last month. Much of that was expected as temporary census workers were laid off. But private employers added just 71,000 workers. That's well below the private sector job growth in March and April and suggests the nascent recovery may be losing steam.

For months now, Obama has been urging Congress to adopt some targeted measures to help small businesses, including a $30 billion loan fund. But those measures have been stymied by Senate Republicans. GOP Senate leader Mitch McConnell argues that the president's economic policies, beginning with the stimulus, have been misguided.

"We've borrowed an enormous amount of money and spent it on the public sector for the last year and a half and still have 9.5 percent unemployment. And most people feel it's way higher than that," McConnell said. "Borrowing money to prime the public sector strikes me as a demonstrable failure. So now I think we need to concentrate on getting the economy going."

Actually, government workers were among the big losers in July. Besides the lost census jobs, cash-strapped state and local governments shed about 48,000 workers. This week, the Senate narrowly passed a $26 billion package of aid to the states, in hopes of avoiding more big layoffs of schoolteachers and other government workers. That seems to be as far as the government is willing to go -- and that's a letdown for Dean Baker of the Center for Economic and Policy Research.

"You're trying to fill an ocean with a bucket. It's not going to do it. Not that they don't understand the depths of the downturn. But I certainly don't think they've proposed policies that are on a scale with the downturn," Baker says.

The anemic economic recovery is taking a political toll on the president, amplifying his other challenges. Dennis Jacobe of Gallup, which regularly polls Americans about both the economy and politics, says consumer confidence and spending have been in a slump since spring -- around the time of the European debt crisis. And the president's approval rating is just 45 percent.

"Obviously, given the lack of progress in the economy and the soft patch now and our measures that show the economy is the major concern of most Americans, that's not unexpected," Jacobe says.

One of the president's top economic advisers, Christina Romer, announced Thursday night that she's leaving the White House to return to her old job as a professor at the University of California. For an academic like Romer, the last year and a half has been a crash course in what happens when economic policy collides with politics.

"I was a little bit spoiled. The first thing I really worked on was the stimulus act. We came into office. It passed. And to realize it isn't always like that; it is often a much bigger struggle," Romer says.

The bigger struggle is between those who want the government to do more to boost the economy and those who think Washington has already done too much. Copyright 2010 National Public Radio. To see more, visit http://www.npr.org/.